Bank survey predicts more gloom

A bank survey has found that business confidence remains mired in gloom, indicating New Zealand's economy may contract for a sixth successive quarter.

The National Bank's monthly survey shows pessimists continue to outnumber optimists, with a net 21% expecting tougher times for their own business in the year ahead, a slight increase on the previous survey.

At the same time, it shows a net 39% of firms expect the economy generally to worsen in the coming year, down two percentage points on the previous survey.

Firms continue to expect lower profits and to cut staff. Investment intentions fell once again to a fresh low and export intentions waned despite a lower dollar during the quarter.

National Bank chief economist Cameron Bagrie says the economy may have reached a bottom, but firms cannot see what will provide a boost from this point onwards.

Another bank, ANZ, predicts the economy will contract 2.8% this calendar year.

The bank says households, which account for 60% of economic activity, are now concentrating on saving, compounding the effects of weak export demand, fewer tourists and lower commodity prices.

Mr Bagrie, who is also chief economist of ANZ, believes a sustained recovery will come in the middle of next year.

ANZ is forecasting the economy will grow 2.4% in 2010, 4.7% in 2011 and 2.9% the year after that.